Digital Transformation. What needs to happen?
It’s that time of year again — time to reflect on what has been and what is to come. As we come into 2017, it feels like the creation of new technologies and their application, and the hype surrounding these technologies, continues. Looking back over the past couple of years, we’ve seen 100’s of companies, worth a combined value of approximately $470 billion*, emerging and trying to take advantage of commercial opportunities. But also, lots of hype around their adoption into solving real problems, or transforming real companies. The question is, will we see real and significant adoption and business change happen around this over the next year?
I’m going to focus on 4 areas in this blog series, but also try to link each together. The main reason for this is that no technology sits in isolation. It has to work with existing systems and businesses, it has to be combined with other technologies, and finally there has to be commercial application to create profitable outcomes for businesses.
The inter-related areas, often taken in isolation, are: Blockchain and Distributed Ledgers, Big Data Analytics and Emerging Technologies (e.g. Solar Technology, IoT) and the underlying theme — digital transformation. So let’s start with the latter.
Digital Transformation
In 2016, the buzzwords Digital Transformation have been over-hyped and also misconstrued. Most of the time there is confusion on what the phrase actually means, other times, you see that it’s focused on marketing, or digital websites. Further the driving focus on technology and sexy topics like Blockchain, AI, Bots and other disruptive technologies is also confusing industry on what to do.
As I’ve already commented, digital transformation is fundamentally about embracing the changing market for business, government and civil society. New economy companies, like Uber and Airbnb, have emerged and gained significant traction in many markets, not because the technology was great, or because their names were cool, but the market wanted and needed that kind of service. Further, the sharing economy and empowering individuals has taken a life of its own and new businesses are emerging thick and fast challenging the status quo in many industries.
Digital Transformation is creating opportunities for new companies, primarily because the structure of markets is changing. New ways of working, new business models, new operating models and new customer needs are driving demand for these companies. Old economy companies are now trying to capture this opportunity by building innovation teams or appointing Chief Digital Officers. However, what’s needed is not new roles or new teams, but a fundamental change in the way of thinking. Incumbents, by their nature, have to protect their current business and therefore are hampered by trying to refactor their business and thinking about how to extend a service or product offering. We don’t see enough companies thinking about re-invention — and whether their enterprise can leverage their existing assets in a new way.
One of the most forward thinking companies who started their digital journey very early is GE:
“We learned this from the consumer internet world: by the time it’s obvious it’s too late. What that means is, now is the time to act. That you’ve got to realize we’re in the first two minutes of a soccer match; by halftime it’s too late.” — William Ruh, Chief Executive Officer, GE Digital, USA.
GE has been very successful in reinventing themselves over decades and not being afraid to invest in new businesses, even if they undermine their existing market. They have sold off or closed down others, where they didn’t fit into their strategy. For example, GE Capital was the largest profit earner in 1990/2000s, but due to the financial crisis, it has been difficult to make the business work without significant investment or restructuring. GE’s decision to not be in this market is brave, but they closed down or sold most of GE Capital by 2017.
What do we do from here?
To enable businesses to transform digitally, or more importantly operationally and strategically, needs an entrepreneurial mindset and approach. To drive that transformation forward, it’s about finding internal entrepreneurs or externals partners who are entrepreneurs themselves to help think about things differently. Entrepreneurs are good at looking at challenges from a fresh perspective, thinking about assets that an enterprise has and inventing new products, services, markets, business models and strategies to future-proof the business.
Digital transformation needs Entrepreneurs — those that understand the present but can invent the future in partnership.
Originally published at fintricity.com
Stay tuned for Part 2 of the Series, focusing on Big Data, Analytics and A.I.
If you’d like to chat about your digital transformation initiatives over a coffee, get in touch to arrange some time with Alpesh.
* World Economic Forum White Paper. Digital Transformation of Industries: Digital Enterprise. January 2016.
